Key Factors Driving Cheese Price Increase

The dairy market has experienced a positive shift as cheese prices rise, driving Class III futures upward. February and March contracts for Class III milk settled at $20.60 and $20.27 per hundredweight, reflecting gains of 33 and 31 cents, respectively.

CME Cheese Performance

Despite reports of sufficient cheese supply, CME spot cheese experienced notable gains. Spot blocks rebounded from previous losses, reaching $1.9100 per pound, marking a 9-cent increase. Barrels also improved, rising 3 cents to settle at $1.8800 per pound.

CME butter prices climbed as well, with 16 lots exchanged, pushing spot butter values to $2.6125 per pound, up by $0.0125.

Demand and Supply Dynamics

The increase in cheese prices aligns with expanding production capacity from new plants entering the market. This boost in production ensures a stronger cheese supply in the private sector. Additionally, spot milk prices surged above Class III prices after the holidays, signaling rising demand for raw milk to support cheese production.

Grain Market Influence

The bullish impact of Friday’s WASDE report influenced grain prices, further shaping the dairy market. March soybeans climbed to $10.5300 per bushel, increasing nearly 28 cents. Meanwhile, March corn advanced 6 cents to $4.7650 per bushel.

Outlook for Cheese Prices

As cheese prices rise, expanding cheese production and strong milk demand are expected to shape future market trends. Favorable developments in the broader agricultural sector continue to support this upward trajectory.

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